Featured Author:

Mark Kantrowitz

As a nationally recognized financial aid expert, Mark has been called to testify before Congress about student aid on several occasions.

He has served as a guest columnist for the New York Times and the Huffington Post and has been interviewed regularly by major news outlets, including the Wall Street Journal, USA Today, MSN, CNN, NBC, ABC, CBS, CNBC and more.

Mark is the author of five books, including three about student aid. His most recent book, Secrets to Winning a Scholarship, helps families find and win scholarships. He is also on the editorial board of the Council on Law in Higher Education and the editorial board of the Journal of Student Financial Aid, a member of the board of directors of the National Scholarship Providers Association and a member of the board of trustees of the Center for Excellence in Education.

Mark is ABD on a PhD in computer science from Carnegie Mellon University (CMU) and holds Bachelor of Science degrees in mathematics and philosophy from MIT and a Master of Science degree in computer science from CMU.

Past attempts to repeal the exception to discharge for private student
loans have failed because members of Congress were unwilling to reopen
the US Bankruptcy Code. The current proposal represents a refinement
of past proposals.

On February 7, 2008, an amendment to the Higher Education
Opportunity Act of 2008
(P.L. 110-315)
proposed by Rep. Danny K. Davis failed by a vote of 179 to 236, with
170 Democrats and 9 Republicans voting in favor and 52 Democrats and
184 Republicans voting against. This amendment would have allowed
private student loans to be discharged after 5 years in repayment. It
would also have closed a loophole whereby mere association of a
for-profit loan program with a non-profit entity made a private
student loan non-dischargeable even though the non-profit entity was
not the source of funding for the loans.

On June 7, 2007, Senator Durbin introduced a bill,
S.1561,
to repeal the exceptions to discharge for private student loans. The
bill was referred to the Committee on the Judiciary and was never
reported out of committee.

On May 26, 2006, Senator Clinton introduced the Student Borrower
Bill of Rights Act of 2006
(S.3255).
She reintroduced it on February 7, 2007, as the Student Borrower
Bill of Rights Act of 2007
(S.511).
Among other provisions, the bill would have allowed new federal and
private student loans to be discharged after 7 years in repayment. The
bill was referred to the Committee on Health, Education, Labor and
Pensions and was never reported out of committee.

This time Congress seems more willing to restore borrower protections
to private student loans.

Text of the Senate Amendment

523(a) Exceptions to discharge
…
(8) unless excepting such debt from discharge under this paragraph
would impose an undue hardship on the debtor and the debtor’s
dependents, for —
(A) (i)an educational benefit ov erpayment or loan made, insured, or guaranteed by a governmental unit, or made under any program funded in whole or in part by a governmental unit or nonprofit institution; or
(ii) an obligation to repay funds received from a governmental unit as an educational benefit, scholarship, or stipend; or
(B) any other educational loan that is a qualified education loan, as defined in section 221(d)(1) of the Internal Revenue Code of 1986, incurred by a debtor who is an individual;

Text of the House Amendment

523(a) Exceptions to discharge
…
(8) unless excepting such debt from discharge under this paragraph
would impose an undue hardship on the debtor and the debtor’s
dependents, for —
(A) (i) an educational benefit overpayment or loan made, insured, or guaranteed by a governmental unit, or made under any program funded in whole or in part by a governmental unit or any program for which substantially all of the funds are provided by a nonprofit institution; or
(B) (ii) an obligation to repay funds received as an educational benefit, scholarship, or stipend; or
(B) any other educational loan that is a qualified education loan, as defined in section 221(d)(1) of the Internal Revenue Code of 1986, incurred by a debtor who is an individual;